Council members heard a presentation about the fiscal year 2024-25 budget plan at the meeting, which included a proposed increased tax rate. The increased rate would result in higher average property tax bills.
No action was taken at the meeting. A public hearing on the city's budget is scheduled for Aug. 13, and council members are expected adopt the final tax rate and budget at an Aug. 27 meeting.
“I would like to remind you that everything we talk about tonight—this is preliminary numbers, preliminary budget,” City Manager Cody Petree said.
The details
This year’s proposed budget would raise more total property taxes than last year’s budget by $1,076,888, or 9.1%, with $539,648 being tax revenue raised from new property added to the tax roll this year. The proposed tax rate would be $0.325726 per $100 valuation, up from the FY 2023-24 rate of $0.308039 per $100 valuation.
The proposed tax rate consists of two parts:
- $0.178187 for maintenance and operations
- $0.147539 for interest and sinking, or debt service
Diving deeper
City Finance Director Kyle Lester, who led the discussion at the meeting, gave more insight on the proposed property tax rate increase in an email following the meeting.
City officials anticipate issuing debt for street projects this coming year, and the principal and interest payments of which will need to be covered through the debt service portion of the city’s tax rate.
The city’s annual operations are also heavily reliant upon sales tax receipts, he said, and for the third year in a row, city officials are seeing those revenues slow down to a point that they are unable to keep up with rising costs in this year’s budget.
“Therefore, property tax will need to increase in order to fill that revenue gap,” Lester said in the email.
What they’re saying
Council member Holly Gray said it’s not realistic for officials to say they will never raise taxes because of the unknowns involved, including what the future will hold or what the state Legislature will do during its sessions every two years. She noted she doesn’t want to see the city yo-yoing on its taxes, by going down one year and then up the next and then down again.
“I would rather us hold where we are, and if we have to go up, we go up,” she said.
Also of note
Operating revenue funds are projected to be $55.4 million, and expenditures are expected to be $63.3 million. Of that $63.3 million, Lester said about $7.86 million is for one-time costs, for which the city will use available cash reserves, and this primarily consists of vehicles, equipment and facility improvements.
“A key component in balancing our budget is identifying which costs are nonrecurring, one-time [costs] and which costs we can anticipate will continue each year into the future, such as maintenance agreements and personnel,” Lester said in the email. “We always ensure that the revenue we earn in any given year will be sufficient to cover those annual overhead costs while allowing any available cash balances in our bank to cover larger, one-time purchases.”
